Question: Strip Mining Inc. can develop a new mine at an initial cost of $10 million. The mine will provide a cash flow of $38 million

Strip Mining Inc. can develop a new mine at an initial

Strip Mining Inc. can develop a new mine at an initial cost of $10 million. The mine will provide a cash flow of $38 million in 1 year. The land then must be reclaimed at a cost of $33 million in the second year. a. What are the IRRs of this project? (Enter your answers in ascending order. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) IRR 1 % IRR 2 % b. Should the firm develop the mine if the discount rate is 29%? 39%? 130%? 170%? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.) Discount Rate NPV Develop? No 29% million 39% million Yes 130% million Yes 170% million No

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